02256cam a22002297 4500001000600000003000500006005001700011008004100028100002300069245007200092260006600164490004100230500001000271520138500281530006101666538007201727538003601799710004201835830007601877856003701953856003601990w1813NBER20161209203025.0161209s1986 mau||||fs|||| 000 0 eng d1 aCarlton, Dennis W.14aThe Rigidity of Pricesh[electronic resource] /cDennis W. Carlton. aCambridge, Mass.bNational Bureau of Economic Researchc1986.1 aNBER working paper seriesvno. w1813 a1986.3 aThis paper presents evidence on the amount of price rigidity that exists in individual transaction prices. Using the Stigler-Kindahi data, I examine the behavior of individual buyers' prices for certain products used in manufacturing. My most important findings are: 1.The degree of price rigidity in many industries is significant. It is not unusual in some industries for prices to individual buyers to remain unchanged for several years. 2.Even for what appear to be homogeneous commodities, the correlation of price changes across buyers is very low. 3.There is no evidence that there is an asymmetry in price rigidity. In particular, prices are not rigid down-ward. 4.The fixed costs of changing price at least to some buyers seem trivial. There are plenty of instances where small price changes occur. 5.The level of industry concentration is strongly correlated with rigid prices. The more concentrated the industry, the longer is the average spell of price rigidity. 6.There appears to be a relationship between price rigidity, size of price change, and the length of time a buyer and seller deal with each other.I interpret the findings as evidence that it is erroneous to focus attention on price as the exclusive mechanism to allocate resources. Nonprice rationing is not a fiction, it is a reality of business and may be the efficient response to economic uncertainty. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w1813.4 uhttp://www.nber.org/papers/w181341uhttp://dx.doi.org/10.3386/w1813